Spring is the perfect time to clean the house. It’s a good time to tidy up accounting practices too. Do some accounting spring cleaning with AB Financial Group. Elevate the sparkle and shine with our best accounting practices tools.
Consider these key components for a strong foundation of best accounting practices.
Cash or accrual – Know the advantages of each accounting method, and choose the one best for the organization. The cash method records transactions as payments are sent or received. Recording a transaction when it is made, before exchange of funds, is the accrual method. There are advantages and challenges for each:
+ Easy cash flow tracking
– Limited long-term data
+ Greater long-term data
+ Informs decision-making
– Complex and harder to manage
The larger the enterprise, the more useful the data from accrual accounting. A business must decide which method serves its goals. Ease of compliance against clarity of position can be at stake within the choice. AB Financial Group has the expertise to partner with owners on this key accounting decision.
Bookkeeping and Software – Automate the function of bookkeeping with accounting software products. Done manually, bookkeeping is prone to error and takes time. The right software products solve these issues, accelerate the bookkeeping function, eliminate errors, and enhance financial statement production. Accounting software is a game changer for companies large and small. As the tools become more integral to the company, the system can be combined with additional software management modules. A suite of software tools can tie multiple functions of a business into a single data-base; a vital consideration for tidy and efficient management.
Designate each accounting teammate – The quality of the data entered to the accounting system is critical to the information quality that is generated. As such, it is important for each lead staff member throughout the organization to be included in the accounting team. Providing optimal data; information that has been generated with oversight, accuracy, goals-based decision-making, timeliness and proper execution, is the best way to forecast the health and future of a company.
New hires, and employees at all levels, should be held responsible for the tasks of their individual work that impact the accounting function. Correct coding of purchases and expenses, inclusion of relevant taxation, awareness of deadlines and cutoff dates for payment requirements, expense reports, payroll and sales record are examples of the important accounting scaffolding that occurs across an organization. An added benefit of a clearly defined accounting team is the two way communication that is engendered between policy-makers and the intended user. Inviting feed-back, ideas for improvements, and innovation from across the enterprise leads to new efficiencies and buy-in from stake-holders.
Maintain a strong accounting structure with internal controls, cost and investment management and optimal tax positioning. Clean accounting data will inform decisions and save cost. Some examples:
Human Resources Cost Management – Cost can be reduced when leadership analyzes employee cost against productivity. Software to track employee time can inform the true cost of discrete tasks. Use of independent contractors may be indicated, a known cost saver
Inventory Cost Management – Inventory can be a high cost item. Effective accounting practices can help lower inventory costs. Tracking purchase costs, inventory turnover rates, loss due to obsolescence, market fluctuation, and other indicators can assist in inventory cost reduction and forecasting.
Capital Expenditure Planning – With consistent, accurate tracking of revenue and cost, a company can better prepare for and execute high cost purchases. The planning likely involves issues such as:
- Optimal timing
- Use of institutional credit
- Eligibility for financing
- Taxation and depreciation cost analysis
- Business credit cards and the associated monetary perks
Tax Season All Year Long – Clean up accounting practices such that the Federal IRS tax position is known throughout the year. Accurate records of revenue and cost, aligned with the specific employment tax records required, and each element of the tax code that applies to the business, will lead to a zero surprise tax payment season. AB Financial Group partners with many enterprises, large and small to navigate tax obligations with ease.
Monthly Reviews – Commit to monthly accounting reviews in order to track internal controls, forecasting and tax positioning. This practice informs as to the turn-around time of sale-to-revenue, on a very short term basis, to avoid any unidentified losses. A monthly reporting practice goes far to minimizing the effort needed to generate quarterly and year end reporting. A less arduous task is a welcome benefit when practicing monthly reviews..
Freshening and committing to high standard accounting practices is a business owner’s best move. Enjoy these benefits of high quality, accurate snd timely accounting data:
Clean Boundaries – Through every accounting reporting period be vigilant to avoid mingling personal and business expenses. This ongoing practice will result in ease of generating reports. When separating personal from business expenses (think, separate credit cards) cashflow, accurate tax position, and forecasting short and long term performance are trustworthy and verified. With clean edges to all business accounting a business is positioned to attain the highest quality investor and lender engagement. Elimination of worry and personal liability is worth the careful oversight.
Identify Areas of Growth – One example may be the flow of revenue from doing business. What improvement can be applied to accounts receivable? Negative impacts may include poor follow-up with past due payments, inaccurate billing records, cash flow challenges leading to debt and its cost, and a drain on workflow. Solutions can involve payment on delivery, customer credit policies that are clear and consistent, proportional payments that support the business cash flow requirements. AB Financial Group assists companies to identify effective improvements with every component of accounting reviews, including the flow of revenue.
Financial Record Management – Protect financial records by backing them up. Whether ledger, paper, digital or in the cloud, it is essential to have a back-up copy across all records. A preventative safety practice, record back-up becomes critical given any form of physical threat to the archive, or, increasingly, cyber and ransomware attacks.
Partner With A Professional – Minding the financial details is critical to business ownership, and sharing management with an accounting professional provides ease to the function. AB Financial Group partners with multiple enterprises, providing services including:
- All bookkeeping functions
- Generating monthly, quarterly and annual financial reports
- Tax management
- Upgrading to cutting edge systems
- Monitoring ever-evolving accounting and tax code standards
- Implementing auxiliary accounting modules to inform financial health
- Analysis for short and long-term forecasting
- Oversight to identify areas for improvement
- Time saving benefits up and down the organization
Contact AB Financial Group today at 970-444-5586 for an introduction on making the most of your company’s accounting spring cleaning.